In confidence building news for HMO investors, recent national research has found that in all regions, the current market value of houses in multiple occupation (HMOs) is still higher than the market value of similar properties in the wider market. Although there is significant variation region to region, the data shows that the average HMO across Britain is valued some 32% more than the wider market value of similar properties. 

The background to this is that licensing changes surrounding HMOs have been rolled out across Britain since 2018, with some areas only adopting the rules up to two years later. These changes meant that a licence must be obtained for any property that is occupied by three or more people from different households, but who share facilities such as a bathroom or kitchen. However, this suggests that licensing laws have had limited impact on investor and lender appetite for these properties and it seems that professional investors in particular are still prepared to take on this risk and recognise the reward of higher income returns.

However, investing in a HMO can be tricky and are not for the faint hearted They are often harder to finance, are subject to additional planning restrictions (if in an Article 4 area or have 7 or more occupants), and not all properties will fit the bill for conversion. Set up and ongoing costs can be higher and the overall management requirements can also be greater.